One of my recent required readings was an article in Entrepreneur Magazine entitled “Why Some Start-ups Succeed (and Why Most Fail)." The article cites two notable statistics. First, the failure rate of all U.S. companies after five years is more than 50% and 70% after 10 years. Second, 75% of venture capital-backed start-ups fail.
As many in our Sheridan small business community know, launching and operating a business is very challenging. The entrepreneur piece digs into the primary reasons entrepreneurs experience business failure. They include issues such as lack of motivation and commitment. Another one is too much pride, resulting in an unwillingness to see or listen.
Issues like these are difficult to overcome because they are inherent in the entrepreneur personally. Not everyone is cut out to be a business founder — passion and commitment are cornerstone attributes, and thus some self-assessment is needed prior to embarking on a start-up venture.
The article mentions other issues that can be addressed, which is where IMPACT Sheridan comes in. High on the list of failure reasons is a lack of good mentorship. We regularly meet with existing and potential clients to provide advice on how to position a venture for success.
I love the creativity of our Sheridan entrepreneur community. We have discussions on many great ideas, but often some key element is lacking. For example, there is not a sufficient understanding of their idea’s value proposition, or the features of the proposed product or service relative to the features of other choices available in the market.
Another example is a lack of understanding of the full costs of running a business. It may appear that a new product offering produces a good profit margin, but often key elements of cost structure are missing. Can a business generate a sufficient profit given all costs incurred in launching and running a new venture?
The No. 1 reason that start-ups encounter difficulty is a lack of access to capital needed to fully develop a product or service offering. This is a tough nut to crack, but IMPACT Sheridan can advise entrepreneurs on grant opportunities, what it takes to apply for business financing and the potential of attracting investors into a new venture.
We also offer our annual Sheridan Start-Up Challenge business plan pitch competition, which is made possible through the generous support of local corporate and foundation sponsors, Sheridan County, the city of Sheridan and the University of Wyoming. Winners of the competition receive valuable seed capital awards that help launch a business. In the four year existence of the challenge, seed funding of nearly $300,000 has been available to help advance entrepreneur plans.
As business failure statistics indicate, the hard reality is that most business start-ups are not successful. At IMPACT Sheridan, we diligently work with our area entrepreneurs to help increase their chances of achieving a thriving business and contributing to our local economy.